What Might the New Dell Look Like?

7/11/2013 8:00PM

If the Dell buyout closes, what might a new Dell look like? Keep an eye on private-equity fund Silver Lake, which says it is just as savvy in helping fix companies as in buying them. Shira Ovide reports on digits. (Photo: AP)

This transcript has been automatically generated and may not be 100% accurate.

... I ... will DAL looks like it gets taken of ... my soul like calmness while commit Digits I'm Simon Constable share of the day has been pondering this question and she joins us now from sentences go ... show thank you very much for being map ... Western areas ... say you've been looking out ... what happens in pride deals ones so polite so drove up as a subtle all what what happened with dal tell us about it ... right so as you said that Michael Dell and private equity firm Silver Lake Partners are our odds are there to take over Dell after shareholder vote next week ... and they're a lot of problems and L A and what one thing that right tackle are things like research and development spending ... which ... that Dell has been ... pretty far out lagging the other big tech company is on hand including of course Apple when even people like Cisco and be aware that we don't typically think of it indicators ... on their After result the PC conundrum which is the PC business is responsible for two-thirds of Dell's revenue lay down directly or indirectly ... that's falling down a whole pretty rapidly ... and they're going to need the cash flow from the operation ... to fund a lot of the investments they're planning to take another year is the company ... it's not clear exactly ... how didn't take had a falling knife in use that to ... to fund of other pieces of the business of those are just a couple of the strategic insight into that and and keeping investors happy night you left an example of the Beat ... acquisition of skylight ... I which rated event of a turnaround and did some of the work of the complains of of of being micro managed ... nobody likes to micromanage ... yes that's true I mean it's a it's it's always a share whenever there's a private equity firm that sad that owns the company rate ... they'll wonder they want to let the executives continue to do their thing ... of course the private equity firm they have an equity stake they own this company ... for their part this company and they have an interest in seeing it do the right thing so you're right ... on the early on when a ... queen soberly took over SEC there for so-called complaints from the carry over management ... that they got micromanaged gaffe by the Silver Lake folks that really in key to the process of the business ... um that probably got better because subtly ... basically fired oval won to the senior managers twenty nine of the thirty ... top senior managers at Sky console people they felt more comfortable with ... and give the Micra mansion probably stop them ... now what one of things you was the right in fact is they've been there and that some aunts on him and just complained that they didn't get paid out on the stock options of they'd been promised ... yet this was can go well I'm well-known controversy in a couple years ago in Silicon Valley that ... a number of former employees of Sprite ... complained that the the ... the YouTube a workload payouts under stock option contracts ... on those things and they did not get that many felt ... certain ... ill treated by the site owners at that time Silver Lake ... aam there were there some evidence that ... even the terms of the stock option contracts in place may not have been quote the stock options they thought they wrote that ... the source of considerable controversy ... that really hasn't been results ... and ... tells about a bag ... how does that relate to ... when it was course was the owner a part owner of ... enabling sky prior to two thousand and nine when Silver Lake bought seventy percent of the asset with an investor group ... on e Bay was a thirty percent owner and give or take in stride with Silver Lake owned it ... one question force with the acquisition of Dell is Silver Lake is can it be in the position of being a minority owner as the day was in ... sight and Michael Dell is going to be the main decider is going on something like seventy five or seventy six percent ... of the company's equity ... the question is what happens it's over Lake and Michael Dell to agree on certain issues and ... um I don't think we have an answer to that but ... it's probably fair to think that ... ETF two orders the company at some point there to disagree ... well I think the thing to ride again to disagree and I remember reading about someone when the leveraged buyout thing Fuss pecan populists like up ... you'll owe my on the equity in the company but if you miss one of these that time and sit with this we have definite Summly high on it because I'd I am It's and ... that that's ... I'm not to be a probably this is no panacea ... they wanna be out of the line one of Wall Street's ... but private equity is not known for being soft right that often are not everybody gets a gold saw the eye ... not everybody gets a gold star that's it that's for sure in your right they're going to have ... close of fourteen billion dollars of debt that they're gonna have to pay back at some point in Dell ... and that and if those if the company doesn't hit their numbers those ... banks are going to wait ... and see if he would be the least of it thank you very much to be that ... of Wall Street don't we appreciate your time ... thanks ... I'm Simon Qassam on that was digits ...